Choosing an Ethical KiwiSaver Fund

When it comes to saving for retirement, many people want their investments to reflect their values. Choosing where to invest your money is like casting a vote for the kind of world you want to live in. Investing in ethical KiwiSaver funds allows you to align your financial choices with your principles, making a positive impact while preparing for your future.

What is Ethical Investing?

Ethical investing involves selecting investment options that align with your social and environmental values. This approach not only seeks financial returns but also considers the broader impact of investments on society and the planet. Ethical investors typically focus on companies that favour sustainability, social justice, and responsible governance.

• Social Factors: This includes investments in companies that prioritise fair labour practices, diversity and inclusion and positive societal contributions. Ethical investors often look for businesses that support human rights and avoid those involved in practices like exploitation or discrimination.

• Environmental Factors: This involves considering the environmental impact of investments. Ethical investing tends to favour companies that adopt sustainable practices, reduce carbon footprints, and contribute to environmental conservation.

Excluded Investments

A key aspect of ethical investing is the practice of exclusions. KiwiSaver funds often exclude investing in industries that come at a social or environmental cost, such as:

• Tobacco

• Fossil Fuels

• Weapons and Defence

• Gambling

• Animal Testing

• Factory Farming

• Palm Oil Production

Every ethical KiwiSaver fund will have different exclusions - these should be available to view on the providers website.

How to Choose an Ethical KiwiSaver Fund

Now that you understand ethical investing, here are some steps to help you choose the right KiwiSaver fund and provider:

1. Research and Review Provider Options

Start by compiling a list of KiwiSaver providers that offer ethical funds, looking for terms like "ethical," or "socially responsible" on their websites. Each provider has different criteria for what constitutes an ethical investment, so review their guidelines, including which industries they avoid, to ensure their values align with yours. Additionally, choose a provider that is transparent about its investment decisions and practices, offering regular reports on fund performance and holdings, as this transparency is crucial for ethical investing.

2. Evaluate Performance

While ethical investing goes beyond just financial returns, it’s crucial to assess how these funds perform in the market. Ethical investing exists on a spectrum, with different funds positioned along that scale. Consider how you balance your commitment to ethical principles with the importance of performance. You might find that a fund with a moderate ethical focus still delivers strong returns, helping you strike a balance between your values and financial goals.

3. Look for RIAA Certification

RIAA-certified KiwiSaver funds meet strict ethical and responsible investing standards set by the Responsible Investment Association Australasia. These funds ensure your money supports companies committed to sustainability and social responsibility. By choosing an RIAA-certified fund, you can align your retirement savings with your values while contributing to a better future.

4. Consider Third-Party Ratings

Check if the provider has been evaluated by third-party organisations that assess ethical investing. These ratings can offer insights into how well the provider adheres to ethical principles. Check out Mindful Money to find out where your money is being invested.

5. Speak to a KiwiSaver Adviser

Consider consulting a KiwiSaver adviser who can assess your individual needs and help you navigate your options. An adviser can evaluate your specific ethical priorities and financial goals, pairing you with a fund that aligns with your ethics while ensuring you achieve optimal returns.

Conclusion

Choosing an ethical KiwiSaver provider is a meaningful way to align your retirement savings with your values. By understanding what ethical investing entails and carefully evaluating your options, you can make informed decisions that contribute to both your financial future and a better world.